International Union, United Auto., Aerospace, and Agr. Implement Workers of America and Its Locals 656 and 985 v. Greyhound Lines, Inc., 81-1377

• Decision Date: 08 June 1983
• Docket Number: No. 81-1377,81-1377
• Citation: 701 F.2d 1181
• Parties: 4 Employee Benefits Ca 1105 INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA AND ITS LOCALS 656 AND 985, et al., Plaintiffs-Appellees, v. GREYHOUND LINES, INC., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1181

701 F.2d 1181

4 Employee Benefits Ca 1105

INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA AND ITS LOCALS 656 AND 985, et al., Plaintiffs-Appellees, v. GREYHOUND LINES, INC., et al., Defendants-Appellants.

No. 81-1377.

United States Court of Appeals Sixth Circuit.

Argued Aug. 3, 1982.

Decided March 11, 1983.

Rehearing Denied June 8, 1983.

Ronald G. Acho, Livonia, Mich., for defendants-appellants.

M. Jay Whitman, Michael B. Nicholson, Detroit, Mich., for plaintiffs-appellees.

Before ENGEL and JONES, Circuit Judges, and NEESE, ^* Senior District Judge.

NATHANIEL R. JONES, Circuit Judge.

Defendants, Greyhound Lines, Inc. appeal from a district court judgment enforcing an arbitration award which required them to implement certain benefit increases in the employees' pension and benefit fund. Greyhound seeks to have the lower court's judgment vacated upon its contention that the arbitrator is a fiduciary under the Employees' Retirement Income Security Act of 1974 (ERISA) and that, as such, he acted unlawfully because he failed to satisfy the bonding requirements under the Act. Since we conclude that ERISA was not intended to subject arbitrators to civil liability, we affirm the judgment below.

I

On March 25, 1956, the International United Auto Workers ¹ (UAW) and the UAW Locals, ² the collective bargaining representatives of certain hourly employees at Greyhound's Detroit Garage and Terminal, entered into an agreement with Greyhound Lines, Inc. This agreement, "Greyhound Pension Trust Plan A," provided for retirement benefits under a plan which was to be jointly administered by a board of trustees comprised of three Greyhound trustees and three Union trustees. In the event that a board vote should result in a deadlock, Article III-5 of the agreement provided for the selection of an arbitrator to resolve the dispute. ³

The dispute that gave rise to this law suit arose at a board meeting on April 13, 1978 when the Union trustees presented a proposal to increase the benefit level for members of the retirement plan. ⁴ The increases were proposed in three areas:

1. Raise the benefit level from $9.25 to $11.60.

2. Increase the pension for all retirees at the terminal who retired prior to December 16, 1976 and for the garage retirees who retired prior to May 1, 1977 by 3%.

3. Pension plan to pay an additional $25 per month to all retirees from the period of their 62nd birthday through their 65th birthday.

This proposal was based upon an actuarial evaluation submitted by the Wyatt Company which was also presented to the board. The Company trustees, however, did not agree to the proposed benefit increases and decided to take the matter under advisement. At a subsequent board meeting on July 20, 1978, the Company trustees refused to implement the Union proposal and, instead, proposed a smaller increase in benefits. ⁵ The Union trustees would not agree to the counter-proposal and, consequently, the trustees deadlocked.

Pursuant to Article III-5 of the trust agreement, the deadlocked issue was submitted for arbitration to George Bowles. Arbitrator Bowles conducted hearings at which the Company trustees argued that the provisions of ERISA, 29 U.S.C. Sec. 1001, et seq., supersede any contrary language in the trust agreement and that arbitration was inappropriate for the settlement of ERISA rights and obligations. Moreover, they asserted that under ERISA, the arbitrator was acting as a fiduciary and, therefore, he should be bonded as required by 29 U.S.C. Sec. 1112. ⁶ The arbitrator issued an opinion and award in which he determined that he had the authority to decide the dispute by virtue of the trust agreement and found in favor of the Union, thereby implementing their proposal: (1) raising the benefit level, (2) increasing the pension, and (3) increasing pension payouts additionally for retirees from their 62nd through their 65th birthday.

Greyhound and its trustees refused to implement the pension increase provisions of the arbitrator's award; rather, they filed a motion for reconsideration wherein they raised, for the first time, the assertion that a preamble to the agreement barred any increase in benefits to pre-January 1, 1976 retirees. The arbitrator recognized that the issue raised by Greyhound had not been raised previously and concluded that he was without jurisdiction to amend, clarify or otherwise interpret his award. ⁷ The UAW instituted this action in federal district court seeking enforcement of paragraphs two and three of the arbitrator's award. The Company cross-claimed against the UAW and added arbitrator Bowles as a cross-defendant, alleging that they had failed to comply with the provisions of ERISA by implementing the increase in pension benefits. The district court held that the arbitrator was not a fiduciary nor had he exceeded his authority in issuing the award. Moreover, the court concluded that even if he were a fiduciary, he had not breached his fiduciary duty because it was not necessary that he be bonded.

The appellant contends that this appeal turns on the conflict that exists between the policy favoring arbitration of labor disputes (Taft-Hartley Act) and that of protecting employee pension and benefit plans (ERISA). Our view of the issue, however, is whether the duties and liabilities that arise under ERISA are enforceable against an arbitrator who is acting in his official capacity and, as such, entitled to arbitral immunity. Accordingly, we shall examine the doctrine of immunity and analyze it in conjunction with the applicable ERISA provisions.

II

The common law doctrine of judicial immunity was first recognized by the Supreme Court in 1872 when it decided Bradley v. Fisher, 80 U.S. (13 Wall.) 335, 20 L.Ed. 646 (1872). This concept was deemed necessary in order to facilitate the proper administration of justice so that a judicial officer is " 'free to act upon his own convictions, without apprehension of personal consequences to himself.' " Stump v. Sparkman, 435 U.S. 349, 355, 98 S.Ct. 1099, 1104, 55 L.Ed.2d 331 (1978), quoting Bradley v. Fisher, 80 U.S. at 347 (1872). The Court has explained the underlying rationale for the principle of judicial immunity as follows:

It is a judge's duty to decide all cases within his jurisdiction that are brought before him, including controversial cases that arouse the most intense feelings in the litigants. His errors may be corrected on appeal, but he should not have to fear that unsatisfied litigants may hound him with litigation charging malice or corruption. Imposing such a burden on judges would contribute not to principled and fearless decision-making but to intimidation.

Pierson v. Ray, 386 U.S. 547, 554, 87 S.Ct. 1213, 1217, 18 L.Ed.2d 288 (1967). Accordingly, judicial immunity applies even when a judge is accused of acting maliciously or corruptly and, such immunity is forfeited only when a judge acts in "the clear abuse of all jurisdiction over the subject-matter." Bradley v. Fisher, 80 U.S. at 351. Accord Jones v. Brown, 54 Iowa 74, 78, 6 N.W. 140, 142-43 (1880).

Originally, absolute immunity extended only to judges to assure their liberty to exercise their tasks with independence and without fear of consequences. See Bradley v. Fisher, 80 U.S. at 349-50. However, the federal courts have accorded quasi-immunity to various other public officials who are entitled to the same type of immunity from liability for those acts performed while acting in their official capacities. ⁸ In Butz v. Economou, 438 U.S. 478, 98 S.Ct. 2894, 57 L.Ed.2d 895 (1977), the Court held absolute immunity extended to the performance of quasi-judicial functions or to those whose powers and purpose are " 'functionally comparable' to that of a judge." Id. at 513, 98 S.Ct. at 2914.

The role of an arbitrator has traditionally been construed to be quasi-judicial in nature. See, e.g., Cahn v. International Union Ladies' Garment Workers Union, 311 F.2d 113, 114-15 (3rd Cir.1962) (per curiam). Traditionally, an arbitrator is one who has no interest in the outcome of the matters under his or her consideration. I. & F. Corp. v. International Ass'n. of Heat and Frost and Asbestos Workers, Local No. 8, 493 F.Supp. 147, 149 (S.D.Ohio 1980). As such, his purpose is "functionally comparable" to a judge and, consequently, he is clothed with an immunity that is analogous to judicial immunity. DeVries v. Interstate Motor Freight System, p 11,333 L.C. at p. 20,586 (N.D.Ohio 1976), affirmed, 620 F.2d 302 (6th Cir.1980), quoting Cahn v. International Ladies' Garment Workers Union, 311 F.2d at 114-15. Accord Corey v. New York Stock Exchange, 493 F.Supp. 51, 56 (W.D.Mich.1980). Therefore, arbitrators have been deemed protected from civil suit under the doctrine of "arbitral immunity." Id. at 55. Accord Raitport v. Provident National Bank, 451 F.Supp. 522, 527 (E.D.Pa.1978).

One of the policies underlying the doctrine of "arbitral immunity" is that of protecting the integrity of the arbitration or decision-making process from reprisals by dissatisfied parties. Corey v. International Ladies' Garment Workers Union, 493 F.2d at 56. The Seventh Circuit Court of Appeals emphasized this point in Tamari v. Conrad, 552 F.2d 778 (7th Cir.1977), when it reviewed the authority of a panel of arbitrators chosen by the Chicago Board of Trade. In regard to insulating the arbitrator from reprisals, the Court reasoned:

We hold that arbitral immunity should be extended to cases where the authority of an arbitrator to resolve a dispute is challenged.... [I]ndividuals cannot be expected to volunteer to arbitrate disputes if they can be caught up in the struggle between the litigants and saddled with the burdens of defending a lawsuit.

552 F.2d at 780-81. This pronouncement had been previously made by a New York Superior Court in Babylon Milk & Cream Co. v. Horvitz, 151 N.Y.S.2d 221 (Sup.Ct.1956), affirmed, 4 A.D.2d 777, 165 N.Y.S.2d...